The financial crash and Ebay

[Flaming_Telepath]

If you were at the Baltimore con this weekend, it seemed as if there was no problems w/ the economy. 99% of the sellers wanted full price or more for "really good" stuff...........

 

That said, I am worried about America's future.........

 

Let's see what happens six months from now. If things don't turn around, I think there will be lots of "bargains" around.

 

Oh, there are probably lots of bargains around right now, but it is not on good stuff. And it won't be anytime soon. The people who have money are not being affected by the credit crunch. The people who depend upon credit to buy everything and pay for everything may indeed feel the crunch.

 

Many of the old timers have told me that they have had some of their very best years during recessions. How did this happen? When money is tight for some, books become available and there is always someone willing and able to purchase those books.

 

 

So, Tom Brulato who spends most days playing the market, will have seen no downside?

 

Let's make this perfectly clear...this is no longer about 'the credit crunch', but has actually called into question the entire way in which business is done and wealth is accumulated and kept, on a personal, business and country level.

 

Anyone who still thinks this is going to be a few months of tight wallets and then soaring recovery is quite

[He11blazer]

Again, I know nothing of economics. Never studied it. But this article makes perfect sense to me: Why bankruptcy is preferable to bailout

 

I've always been suspicious of government assisting corporations. If a business is failing, let it fail. My conspiracy-theorist senses are quite convinced that government bailouts are nothing but the mega-rich greasing their palms and rubbing each other's backs.

[delekkerste]

[The people who have money are not being affected by the credit crunch.

 

This is just so, so wrong, it's not even funny. People who have money are among the most affected by this downturn. I'm not telling people to feel sorry for them, but the numbers don't lie - more than a trillion dollars of market capitalization was wiped out in yesterday's stock market decline alone. Who do you think took that hit? Poor people? Plenty of people who have money have been choking on their real estate holdings, many of which are leveraged - how do you think Donald Trump almost went under in the early 1990s? How many "wealthy" people are in that position now do you think?

 

Anyway, my point was not to incite a class warfare debate, but rather to point out that everyone from Joe Sixpack to the richest Russian oligarch (and everyone in-between) is taking a beating from this economic downturn and credit crisis, not just the ones who use and need credit. Those investing in art and collectibles expecting these high-end buyers to maintain their same buying patterns in these tough times may find that that both their wallets and mindsets may have taken more of a hit lately than you think. Like I said, I already know of several BSDs who have taken a good beating and are scaling back; I suspect these stories will eventually make it into the public domain and will surprise a lot of people.

[1Cool]

Great topic! I don't have much to add but I did see the writing on the wall a couple years ago when I purchased my "step-up home". My wife and I went out looking at homes and I got approved for a $275,000 loan with a 2 year ARM with a 4% rate. I couldn't do it. I couldn't sleep at night knowing that I could lose our home in two years if the rate doubled. We went with a nice $225,000 home that maxed us out but we locked into a 30 year loan at 5.25%. To make matters worse, we only had 5% down on the new loan and they were happy to push us a 10% equity lone to avoid PMI. The banks kept making it very easy to "bump up" our new home and I felt kind of like a chump when the buy-out discussion hit. Why didn't I take the large home and the goverment would have bailed us out. I couldn't do it then and I wouldn't do it different now.

 

I didn't write it down but I remember saying to a friend at about that time that the similarities are scary to the Great Depression. People over-extending with a house of cards waiting to fall. Were smarter now than then . . right??

[heinlein99]

 

Well. Actually things are quite simple. You gamble and sometimes you win and sometimes you lose.

 

If you put your eggs in the basket that has a potential return of a whole lot and did not put eggs in a basket that guaranteed a return of "enough", and you lose. Who's fault is that? The chickens? The farmer who owned the chickens that laid the eggs? Or the greedy S0B that put all or most of his eggs in the one basket?

 

Probably not a good anaolgy, but I think that you get the point. You want to lay some blame on the people or companies that, "perhaps it was the slick mortgage brokers that sold them on a bad loan??, well, there are always snake oil sellers. If someone buys snake oil that is supposed to cure everything from cancer to warts, all fo a dollar, then THEY are the insufficiently_thoughtful_person. Not the seller.

 

A lot of people only want to think that when they 'invest,' they can, or should, only gain. But just putting up the money - like sitting down with it at a poker table - means you can potentially lose it.

 

It reminds me of the movie Casino where Joe Pesci threatens the banker to get his investment money back after losing some of it in the market.

[gpanalysis]

So Gene, what's your take on the "bailout" bill? What's the fundamental reason that the US Government should bail out the finance sector? Putting aside that the Government will have to borrow the money (or worse, print more greenbacks) to acquire the loans/investments, if you "had" the money to bankroll the bailout, would you consider it a good investment?

[VintageComics]

That was partially the point I was trying to make...there are no guarantees and yet we bank on them...I know I have.

 

R.

 

 

[The Less Blob]

We as americans were upset over a 700 billion cost to divest firms of their mortgage portfolios. We lost 1 trillion dollars in our investments today with the Dow down 777 points. 1 Trillion dollars in pensions, money markets, stocks etc is gone poof........... Someone help me on understand this...........and the way certain Americans are thinking.

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it isn't "poof" gone. it could bounce back in 3 days if people get optimistic. those are paper losses. you've only lost it if you sell out. last i heard it was back up 300 points, so there you have 400 billion $ back.

[The Less Blob]

The banks kept making it very easy to "bump up" our new home and I felt kind of like a chump when the buy-out discussion hit. Why didn't I take the large home and the goverment would have bailed us out.

****************************************************

 

Who says you're going to get any bailout money? This bailout is there to help banks.

 

With that said it hurt my brain how so many people were buying homes with 5% (or less) down. When I bought my first apartment I put 40% down, which I know was excessive, but I am paranoid. Once upon a time, unless you were buying some sort of subsidized housing, you scraped together 20%.

[supapimp]

i don't know why people freak out and sell, yesterday my portfolio lost 11.62%, today it went up 15.45%, hold and don't sell or diversify your portfolio better.

[The Less Blob]

flaming -- isn't the U.K. about to hit a similar crisis in that the average Brit is leveraged up to his/her ears with debt too? One saving grace, other than home ownership levels probably being a bit lower, is that you guys probably didn't have nearly as much outright fraud like we saw with subprime loans made here to people who barely had an income, but when I was over there in 2006 I read article after article about how the run up in real estate values had resulted in people being way overmortgaged/in debt, etc. (as in higher than U.S. levels even), meaning that if the economy tanked, people were going to have some serious problems.

 

it will be interesting. though, as many here recall, during the late 80's/early 90's recession, comics took off. but it's a different world now, who knows. my LCS owner viewed it like this: when times were bad the guy with only $50 who wanted to "play" wasn't exactly in a position to play the stock market, but he could play with comics. this isn't exactly a ringing endorsement for the bigger books out there, true. with that said, 15 years ago $50 could get you a nice little stack of stuff.

 

 

[Flaming_Telepath]

flaming -- isn't the U.K. about to hit a similar crisis in that the average Brit is leveraged up to his/her ears with debt too? One saving grace, other than home ownership levels probably being a bit lower, is that you guys probably didn't have nearly as much outright fraud like we saw with subprime loans made here to people who barely had an income, but when I was over there in 2006 I read article after article about how the run up in real estate values had resulted in people being way overmortgaged/in debt, etc. (as in higher than U.S. levels even), meaning that if the economy tanked, people were going to have some serious problems.

 

it will be interesting. though, as many here recall, during the late 80's/early 90's recession, comics took off. but it's a different world now, who knows. my LCS owner viewed it like this: when times were bad the guy with only $50 who wanted to "play" wasn't exactly in a position to play the stock market, but he could play with comics. this isn't exactly a ringing endorsement for the bigger books out there, true. with that said, 15 years ago $50 could get you a nice little stack of stuff.

 

 

Yeah, we've got a serious debt problem here with many people holding mortgages much higher than the value of their property. The problem with both Northern Rock and Bradford & Bingley, two financers who have gone to the wall, is that they played heavily in our own sub-prime market. We call it 'self-certification', in that the lender is prepared to take a borrower's word on what they are earning, rather than request any evidence.

 

We also have a huge problem with homeowners refinancing to release equity out of their properties for consumer spending. That has driven economic growth for some time, but the tap has now been turned off as lending criteria toughen up and equity disappears.

 

However, our property market will make a full, and probably spectacular, recovery in a very short period of time, as there simply is not enough housing to go around. This is going to be made worse by the fact that the building trade was the first to go into recession with many firms issuing wholesale redundancies and scrapping projects left and right. When things do loosen, there will be a huge backlog of demand and even less available properties.

[The Less Blob]

However, our property market will make a full, and probably spectacular, recovery in a very short period of time, as there simply is not enough housing to go around.

_________________________________________________________

 

Well, I'm not exactly sure that the problem is too many homes in the U.S., at least where the markets are getting hammered. Yes, a few cities saw too much building, but it isn't like there isn't plenty of demand in California. There are subprime problems here in New York where I live and there is an acute housing shortage here. Lots of demand --- I could rent out the third floor of my house and my basement (if I finished it) in a heartbeat and probably be pulling in $1500+/- a month between the two, just that some $600,000 homes really should have been $300,000 homes in some of these neighborhoods and people are in over their heads.

[Lego]

i don't know why people freak out and sell, yesterday my portfolio lost 11.62%, today it went up 15.45%, hold and don't sell or diversify your portfolio better.

 

The question is, how much have you lost since this mess started (when the Dow was at 14k+), and how long will it take for you to "earn" back the money you've lost?

 

I hear this "ride it out" argument quite a bit, and it always makes me cringe. If people had jumped ship back when this was CLEARLY going to be a major problem (as early - and late - as last year), they'd be a heck of a lot better off now than if they chose to "ride it out". How many years is it going to take for you to recoup the money you've lost so far, assuming that your portfolio is like most and it grows at a reasonable, if not healthy, 12-15% per year? What if the bottom continues to drop out? Do you have a point where you say "enough is enough"?

 

To my mind, there comes a time when the bleeding should be stopped. The economy, to say nothing of the stock market, is not going to rebound overnight, or (to coin a couple phrases) overweek, or overmonth, for that matter. If you're paying attention, you'll know when it's time to get back in, but at this point, there's a lot more room for this thing to fall, and if you're going to "ride it out", I think you might be very, very sorry.

 

[supapimp]

i haven't loss, even with the 11.62% that i was down from yesterday i was still ahead. my portfolio has out performed 30% against the market in almost one year. here's one stock that i own that did fairly well today SCHW.

[Aman619]

you are describing the strategy known as "timing the market". Its not as easy as you make it sound. Looking back its too easy to calculate a scenario like what you describe, what if you sold at the top compared to whats left now. But the "top" is only visible in the rear view mirror.

 

I get your point, but it misses the essential question: What's the best way to make your hard earned money grow? so you stay ahead of inflation and have a lot more than you invested to spend when you stop earning a salary..

 

If you stay out of the market completely and stick with simple interest, fine. You will never lose a dime. You will earn the minimum though and maybe fall behind inflation.

 

So its all about your risk tolerance. To earn greater returns, you have to take greater risks.

 

This is all Page One boiler plate on any investment How-To booklet.

[Lego]

you are describing the strategy known as "timing the market". Its not as easy as you make it sound. Looking back its too easy to calculate a scenario like what you describe, what if you sold at the top compared to whats left now. But the "top" is only visible in the rear view mirror.

 

I get your point, but it misses the essential question: What's the best way to make your hard earned money grow? so you stay ahead of inflation and have a lot more than you invested to spend when you stop earning a salary..

 

If you stay out of the market completely and stick with simple interest, fine. You will never lose a dime. You will earn the minimum though and maybe fall behind inflation.

 

So its all about your risk tolerance. To earn greater returns, you have to take greater risks.

 

This is all Page One boiler plate on any investment How-To booklet.

 

Agreed... and I didn't mean to oversimplify. I do believe, however, that the signs and signals of this particular episode have been a long time coming, so while it is usually very difficult (if not dang near impossible) to spot a downturn or a spike before it's upon you, this (to my eye) was an exception.

[Lego]

i haven't loss, even with the 11.62% that i was down from yesterday i was still ahead. my portfolio has out performed 30% against the market in almost one year. here's one stock that i own that did fairly well today SCHW.

 

That's terrific! There are still a few goodies out there with plenty of room to grow (my own company included)...

[Aman619]

you are describing the strategy known as "timing the market". Its not as easy as you make it sound. Looking back its too easy to calculate a scenario like what you describe, what if you sold at the top compared to whats left now. But the "top" is only visible in the rear view mirror.

 

I get your point, but it misses the essential question: What's the best way to make your hard earned money grow? so you stay ahead of inflation and have a lot more than you invested to spend when you stop earning a salary..

 

If you stay out of the market completely and stick with simple interest, fine. You will never lose a dime. You will earn the minimum though and maybe fall behind inflation.

 

So its all about your risk tolerance. To earn greater returns, you have to take greater risks.

 

This is all Page One boiler plate on any investment How-To booklet.

 

Agreed... and I didn't mean to oversimplify. I do believe, however, that the signs and signals of this particular episode have been a long time coming, so while it is usually very difficult (if not dang near impossible) to spot a downturn or a spike before it's upon you, this (to my eye) was an exception.

 

maybe... maybe so. But not too many people saw the depth of this mess. And even fewer who saw the signs felt the urgent need to run for shelter. The big ones are hard to see and harder to believe are real.

 

 

[conditionfreak]

If you had pulled out after yesterdays 7% drop. You would not have been in for todays 5% climb.

 

I think that you would be very very unhappy for jumping the gun.

 

Sure, if you would have got out a month ago, you would be happy, but how many have a crystal ball?